Optimism drives TV ad revenue

Improving business confidence and growing acceptance of the networks’ digital channels have triggered a jump in advertising on free-to-air ­television.

Figures compiled by SMI, which tracks ad revenue based on data from the 13 largest media agencies, show the capital city TV ad market rose 28 per cent in April from the same month a year earlier.

The value of advertising booked by the 13 agencies rose 16 per cent in April, indicating that the 2009 slump in media ad markets – when ad spending fell 8 per cent – is over.

“Some marketing and media executives say there is still a bit of caution in the ad market," said the executive chairman of Australia’s biggest ­media agency,
Mitchell Communi­cation Group
,
Harold Mitchell
.

“They are wrong. The last thing marketers are right now is cautious. Media ad markets are very strong."

The 13 agencies that supply data to SMI, including Mitchell, cover about 50 per cent of total media ad spending, including 85 per cent of free-to-air TV ad revenue. The SMI numbers do not cover “direct" advertisers such as Harvey Norman, which do not use agencies, and some large advertisers that are not clients of the 13 agencies, including Toyota. The 28 per cent surge during April followed growth of about 10 per cent in the March quarter and represented a strong turnaround from the 8.6 per cent ­decline during 2009.

“Demand is strong, advertisers’ booking cycles are longer and the digital channels have exceeded expectations in terms of ad revenue," said Seven Media Group’s chief sales and digital officer,
James Warburton
.

“The TV market has certainly come out of last year’s downturn quicker than anyone expected."

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Capital city free-to-air TV had the fastest ad revenue growth in April, SMI says. Pay TV ad revenue booked through the 13 agencies was up 14 per cent, online ad revenue rose 23 per cent, radio ad revenue was down 15 per cent and newspaper ad revenue was up 2 per cent.

Last month, Nine Network chief executive
David Gyngell
predicted the free-to-air TV ad market would grow 11 per cent to 12 per cent in this half. Others were more bullish.

“It’s looking more like 15 per cent growth in this half and 10 to 15 per cent in the December half," said one TV executive, who did not want to be named. Some of the TV networks’ revenue growth this year has been driven by the digital channels launched over the past 14 months.